Most of The Bond Buyer’s yield indexes declined this week, as the municipal market grew firmer over the past several sessions in the last full week of activity prior to the Thanksgiving holiday.
“It seems a combination of January reinvestment flows and the whole roll-down of the yield curve has been on many peoples’ minds, and also the steepening of the yield curve that comes along with that,” said Michael Pietronico, chief executive officer at Miller Tabak Asset Management. “Shorter maturities have done extraordinarily well this week, in terms of seeing good investor demand.
“With the exception of California paper, [the new issues] seem to be meeting reasonably good demand,” Pietronico continued. “However, the caveat is it’s priced cheaper than the secondary to clear the market. So it keeps the secondary in check, but most high-quality issuers do trade up after they’re free to trade, so it’s just hitting the level that clears the market. But it’s our expectation that supply will diminish for the next two weeks or so, with the holidays coming, so there’s probably a decent opportunity to pick up some paper.”
Leading the new-issue market this week, the Empire State Development Corp. priced $1.5 billion of state personal income tax bonds, including $576.1 million of taxable Build America Bonds.
The Bond Buyer 20-bond index of 20-year general obligation bond yields declined five basis point this week to 4.35%. That is the lowest level for the index since Oct. 22, when it was 4.31%.
The 11-bond index of higher-grade 20-year GO yields dropped four basis points this week to 4.08%, which is the lowest it has been since Oct. 22, when it was 4.04%.
The revenue bond index, which measures 30-year revenue bond yields, rose two basis point this week to 5.04%, which is the highest the index has been since Sept. 10, when it was 5.33%.
The 10-year Treasury note declined 11 basis points this week to 3.35%, which is the lowest it has been since Oct. 8, when it was 3.24%.
The 30-year Treasury bond also dropped 11 basis points this week, to 4.29%. This the lowest the 30-year yield has been since Oct. 22, when it was 4.24%.
The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, declined one basis point this week to 0.55%, which is the lowest it has been since Oct. 28, when it was also 0.55%.
The weekly average yield to maturity on The Bond Buyer’s 40-bond municipal bond index, which is based on 40 long-term municipal bond prices, finished at 5.46%, up three basis points from last week’s 5.43%.